SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a)
of the Securities Exchange Act of 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement [ ] Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
CYTRX CORPORATION
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(i)(2)
or Item 22(a)(2) of Schedule 14A.
[ ] $500 per each party to the controversy pursuant to Exchange Act
Rule 14a-6(i)(3).
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
1) Title of each class of securities to which transaction applies:
2) Aggregate number of securities to which transaction applies:
3) Per unit price or other underlying value of transaction computed pursuant
to Exchange Act Rule 0-11 (Set forth the amount on which the filing fee
is calculated and state how it was determined):
4) Proposed maximum aggregate value of transaction:
5) Total fee paid:
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
2) Form, Schedule or Registration Statement No.:
3) Filing Party:
4) Date Filed:
<PAGE>
CYTRX CORPORATION
154 Technology Parkway
Norcross, Georgia 30092
May 10, 1996
Dear Stockholder:
You are cordially invited to attend the Annual Meeting of Stockholders of
CytRx Corporation which will be held at the Hilton Hotel at Peachtree Corners,
5993 Peachtree Industrial Boulevard, Norcross, Georgia 30092, on Tuesday, June
25, 1996, at 10:00 A.M. local time.
We look forward to your attendance at the Annual Meeting so that you can vote
your shares in person and become better acquainted with members of the Board of
Directors and management team. Three items of business, which will be
considered and voted upon this year, are explained in the accompanying Proxy
Statement. Even if you are planning to attend, please complete the enclosed
proxy card and return it in the enclosed envelope so that your shares may be
voted. You will still be able to vote your shares in person if you attend the
Annual Meeting.
If you have any questions about the Proxy Statement or the 1995 Annual
Report, please contact James M. Yahres at (770) 368-9500.
Sincerely,
/s/ Jack J. Luchese
Jack J. Luchese
President and Chief Executive Officer
<PAGE>
CYTRX CORPORATION
154 Technology Parkway
Norcross, Georgia 30092
NOTICE TO THE HOLDERS OF COMMON STOCK
OF ANNUAL MEETING OF STOCKHOLDERS
to be held on June 25, 1996
Notice is hereby given to the holders of the $.001 par value per share Common
Stock (the "Common Stock") of CytRx Corporation (the "Company") that the Annual
Meeting of Stockholders of the Company will be held at the Hilton Hotel at
Peachtree Corners, 5993 Peachtree Industrial Boulevard, Norcross, Georgia
30092, on Tuesday, June 25, 1996, at 10:00 A.M., local time (the "Annual
Meeting") for the following purposes:
(i) To elect four directors to serve until the 1997 Annual Meeting of
Stockholders;
(ii) To ratify the selection of Ernst & Young LLP as independent auditors
for the fiscal year ending December 31, 1996; and
(iii) To transact such other business as may properly come before the Annual
Meeting or any adjournments thereof.
Only those stockholders of record at the close of business on April 26, 1996,
are entitled to notice of and to vote at the Annual Meeting or any adjournments
thereof. The transfer books will not be closed. A complete list of
stockholders entitled to vote at the Annual Meeting will be available at the
Annual Meeting.
By Order of the Board of Directors,
/s/ James M. Yahres
James M. Yahres
May 10, 1996 Secretary
WHETHER OR NOT YOU EXPECT TO ATTEND THE ANNUAL MEETING, PLEASE VOTE, SIGN,
DATE, AND RETURN THE ENCLOSED PROXY PROMPTLY IN THE ENCLOSED BUSINESS REPLY
ENVELOPE. IF YOU ATTEND THE ANNUAL MEETING YOU MAY, IF YOU WISH, WITHDRAW YOUR
PROXY APPOINTMENT AND VOTE IN PERSON.
<PAGE>
CYTRX CORPORATION
154 Technology Parkway
Norcross, Georgia 30092
May 10, 1996
PROXY STATEMENT
INTRODUCTION
This Proxy Statement is furnished to holders of the $.001 par value per share
Common Stock ("Common Stock") of CytRx Corporation, a Delaware corporation (the
"Company" or "CytRx"), in connection with the solicitation of proxies by the
Company's Board of Directors from holders of the outstanding shares of Common
Stock for use at the Annual Meeting of Stockholders to be held at 10:00 A.M.
local time at the Hilton Hotel at Peachtree Corners, 5993 Peachtree Industrial
Boulevard, Norcross, Georgia 30092, on Tuesday, June 25, 1996, and at any
adjournments thereof (the "Annual Meeting").
With respect to the holders of Common Stock, the Annual Meeting will be held
for the following purposes: (i) to elect four directors to serve until the 1997
Annual Meeting of Stockholders; (ii) to ratify the selection of Ernst & Young
LLP as independent auditors for the fiscal year ending December 31, 1996; and
(iii) to transact such other business as may properly come before the Annual
Meeting.
The Company's mailing address and the location of its principal executive
offices are 154 Technology Parkway, Norcross, Georgia 30092. This Proxy
Statement and the accompanying Proxy are first being mailed to stockholders of
the Company on or about May 10, 1996.
STOCKHOLDERS ENTITLED TO VOTE
Only stockholders of record of the Company at the close of business on April
26, 1996 (the "Record Date") will be entitled to notice of, and to vote at, the
Annual Meeting. On the Record Date, there were 7,870,920 shares of the Common
Stock issued and outstanding held by approximately 1,500 stockholders of record.
Notwithstanding the Record Date specified above, the Company's stock transfer
books will not be closed and shares may be transferred subsequent to the Record
Date. However, all votes must be cast in the names of stockholders of record on
the Record Date.
Pursuant to the Bylaws of the Company, holders of Common Stock are entitled
to one vote per share. In addition, the Bylaws provide that the holders of
shares of the Common Stock entitled to cast a majority of the votes on the
matters at issue at the Annual Meeting, present in person or by proxy, shall
constitute a quorum. For the purpose of determining the presence of a quorum,
abstentions will be counted as present, but broker non-votes will not be
counted.
Proposal I, the election of four directors, will require the affirmative vote
of a plurality of the votes of the shares of Common Stock represented and
entitled to vote at the Annual Meeting, provided a quorum is present. Proposal
II, the ratification of Ernst & Young LLP as independent auditors for the
fiscal year ending December 31, 1996, will require the affirmative vote of a
majority of the votes of the shares of Common Stock represented and entitled
to vote at the Annual Meeting, provided a quorum is present.
With regard to the election of directors, votes may be cast in favor or
withheld. Votes that are withheld will be excluded entirely from the vote and
will have no effect. Votes that are withheld for a particular nominee will be
excluded from the vote for that nominee only. Abstentions and broker non-votes
will have no effect since approval by a percentage of the shares present or
outstanding is not required.
1
<PAGE>
Abstentions may be specified on proposals other than the election of
directors. Abstentions will be considered present and entitled to vote at the
meeting. However, abstentions will not be counted as votes cast in the
affirmative and therefore will have the effect of a negative vote for the
proposals (other than the election of directors). Broker non-votes are not
considered entitled to vote and thus will have no effect on such proposals.
PROXIES
If the enclosed Proxy is executed, returned in time and not revoked, the
shares represented thereby will be voted in accordance with the instructions
indicated in such Proxy. IF NO INSTRUCTIONS ARE INDICATED, PROXIES WILL BE
VOTED FOR (I) THE ELECTION OF ALL DIRECTOR NOMINEES, (II) RATIFICATION OF ERNST
& YOUNG LLP AS INDEPENDENT AUDITORS FOR THE FISCAL YEAR ENDING DECEMBER 31,
1996; AND (III) IN THE BEST JUDGMENT OF SUCH PROXIES AS TO ANY OTHER MATTERS
WHICH MAY PROPERLY COME BEFORE THE ANNUAL MEETING OR ANY ADJOURNMENTS THEREOF.
A stockholder who has given a Proxy may revoke it at any time prior to its
exercise at the Annual Meeting by either (i) giving written notice of revocation
to the Secretary of the Company, (ii) properly submitting to the Company a duly
executed Proxy bearing a later date, or (iii) appearing at the Annual Meeting
and voting in person. All written notices of revocation of Proxies should be
addressed as follows: CytRx Corporation, 154 Technology Parkway, Norcross,
Georgia 30092, Attention: James M. Yahres, Secretary.
PROPOSAL I
ELECTION OF DIRECTORS
The Bylaws of the Company provide that the Board of Directors shall consist
of not less than three, nor more than nine individuals with the exact number of
directors determined by resolution of the Board of Directors. Pursuant to the
Company's Bylaws, the Board of Directors has set the number of directors of the
Company at four and proxies cannot be voted for a greater number of persons.
The Board of Directors has nominated the following individuals for election by
the holders of Common Stock as directors of the Company:
Jack L. Bowman
Raymond C. Carnahan, Jr.
Jack J. Luchese
Herbert H. McDade, Jr.
Each director will be elected to hold office until the 1997 Annual Meeting of
Stockholders or until their earlier death, resignation or removal. The persons
designated as proxies intend to vote the shares represented thereby in favor of
the election to the Board of Directors of the nominees whose names appear above,
unless either authority to vote for any or all of the nominees is withheld or
such proxy has previously been revoked. It is believed that the nominees will
be available and able to serve as directors. In the event that a nominee is
unable to serve (which is not anticipated), the persons designated as proxies
will cast votes for the remaining nominees and for such other person as they may
select. It is anticipated that management stockholders of the Company will vote
for the election of the nominees. Mr. Selvi Vescovi, a current director, is not
standing for reelection.
The Board of Directors recommends a vote FOR the nominees for election as
directors. If a choice is specified on the proxy by the stockholder, the shares
will be voted as specified. If no specification is made, the shares will be
voted "FOR" the nominees. The affirmative vote of a
2
<PAGE>
plurality of the votes of shares of Common Stock represented and entitled to
vote in the election at the Annual Meeting at which a quorum is present is
required for the election of the nominees.
CERTAIN INFORMATION CONCERNING NOMINEES
The following table sets forth the names of the nominees for election as
directors, their ages, the year in which they were first elected a director,
their positions with the Company, their principal occupations and employers for
at least the last five years, and any other directorships held by them in
companies that are subject to the reporting requirements of the Securities
Exchange Act of 1934 or any company registered as an investment company under
the Investment Company Act of 1940. For information concerning membership on
Committees of the Board of Directors, see "Meetings of the Board of Directors
and Committees" below. For information concerning directors' ownership of Common
Stock, see "Beneficial Owners of More Than Five Percent of the Company's Common
Stock; Shares Held by Directors and Executive Officers" below.
Positions with the Company, Principal
Name and Year Occupations During at Least the Past Five
First Elected Director Age Years, and Other Directorships
- ---------------------- --- ----------------------------------------------
Jack L. Bowman 63 Prior to his retirement at the end of 1993,
(1994) Mr. Bowman was Company Group Chairman at
Johnson & Johnson Company, a position he held
from 1987. From 1991 to 1993, Mr. Bowman was
responsible for Johnson & Johnson Company's
diagnostic, blood glucose monitoring, and
certain over-the-counter pharmaceutical
businesses. Prior to that assignment at
Johnson & Johnson, he was responsible for a
major portion of Johnson & Johnson's global
pharmaceutical businesses. From 1983 to 1987,
he was Executive Vice President of American
Cyanamid Company where he was responsible for
the pharmaceutical, medical device and over
the counter and toiletry businesses. Mr.
Bowman has also served as President, Lederle
Laboratories Division and Executive Vice
President, CIBA-GEIGY Pharmaceutical Division.
Mr. Bowman serves as a director of NeoRx
Corporation, Pharmagenics, Inc., Cell
Therapeutics, Inc. and Coating Technologies
International. He also is a director of
Proceutics, Inc., Vaxcel, Inc. and Vetlife,
Inc., wholly-owned subsidiaries of CytRx
Corporation, and is a former member of the
Johns Hopkins University Board of Trustees.
Raymond C. Carnahan, Jr. 70 Mr. Carnahan has over 39 years of experience
(1991) in cost controls and operational systems in a
variety of industries. Prior to his
retirement in 1991, Mr. Carnahan served as
Manager, International Cost Analysis planning
for Johnson & Johnson International from 1974
to 1991. Mr. Carnahan is an arbitrator for
the American Arbitration Associates and has
provided consulting services to Waterford-
Wedgewood Corporation in England and to Torf
Pharmaceutical Corporation in Poland. Mr.
Carnahan also serves as the Treasurer for the
Morristown Memorial Hospital Chaplaincy
Service in Morristown, New Jersey, and is a
director of Proceutics, Inc., Vaxcel, Inc. and
Vetlife, Inc., wholly-owned subsidiaries of
CytRx Corporation.
3
<PAGE>
Jack J. Luchese 47 Mr. Luchese was named President and Chief
(1989) Executive Officer of the Company in March,
1989 and became Chairman of the Board in June,
1995. Prior to joining the Company, Mr.
Luchese served as Vice President and General
Manager of the Armour Pharmaceutical
Corporation, and as Vice President, Corporate
Business Development and a member of the
Management Committee of Rorer Group, Inc. (now
Rhone-Poulenc Rorer). Prior to joining Rorer
Group, Inc. , Mr. Luchese was with Johnson &
Johnson Company for 15 years where he held
various positions in business development,
licensing, sales, new product marketing, and
finance. Mr. Luchese also serves as a
director of Proceutics, Inc., Vaxcel, Inc. and
Vetlife, Inc., wholly-owned subsidiaries of
CytRx Corporation.
Herbert H. McDade, Jr. 69 From 1989 to 1996 Mr. McDade has served as
(1990) Chairman, President and Chief Executive
Officer of Chemex Pharmaceuticals, Inc.,
becoming Chairman of Access Pharmaceutical Co.
(the successor corporation to Chemex) in
January, 1996. From 1986 to 1989 he was
Chairman and President of Armour
Pharmaceutical Corporation, a wholly-owned
subsidiary of Rorer Group, Inc. (now Rhone-
Poulenc Rorer). Prior to 1986, Mr. McDade
served as Vice President of the Revlon
Corporation. Mr. McDade also serves as a
director of Proceutics, Inc., Vaxcel, Inc. and
Vetlife, Inc., wholly-owned subsidiaries of
CytRx Corporation, and is a member of the
Board of Trustees of Thomas Acquinas College.
MEETING OF THE BOARD OF DIRECTORS AND COMMITTEES
Board of Directors. The property, affairs and business of the Company are
under the general management of its Board of Directors as provided by the laws
of Delaware and the Bylaws of the Company. The Company has standing Audit,
Compensation and Nominating Committees of the Board of Directors.
The Board of Directors held seven meetings during 1995. Each director,
during the period he was a director, attended at least 75% of the meetings of
the Board of Directors. Each member of a committee, during the period he was a
committee member, attended at least 75% of the meetings of each committee on
which they served.
Audit Committee. The Audit Committee makes recommendations concerning the
engagement of independent public accountants, reviews with the independent
public accountants the plans and results of the audit engagement, approves
professional services provided by the independent public accountants, reviews
the independence of the independent public accountants, considers the range of
audit and non-audit fees and reviews the adequacy of the Company's internal
accounting controls. The current members of the Audit Committee are Raymond C.
Carnahan (Chairman), Herbert H. McDade and Selvi Vescovi. The Audit Committee
Compensation Committee. The Compensation Committee is authorized to review
annual salaries and bonuses and has the authority to determine the recipients of
options, the time or times at which options shall be granted, the exercise price
of each option, and the number of shares to be issuable upon the exercise of
each option. The Committee also is authorized to interpret the CytRx
Corporation 1986, 1994 and 1995 Stock Option Plans (collectively, "the Plans"),
to prescribe, amend and rescind rules and regulations relating to the Plans, to
determine the term and provisions of the respective option agreements, and to
make all other determinations deemed necessary or advisable for the
administration of the Plans. Its
4
<PAGE>
current members are Selvi Vescovi (Chairman), Raymond C. Carnahan and Herbert
H. McDade. The Compensation Committee held three meetings during 1995.
Nominating Committee. The Nominating Committee makes recommendations
concerning the nomination of persons to serve on the Board of Directors. While
the committee will consider nominees recommended by stockholders, it has not
actively solicited recommendations nor established procedures for this purpose.
The current members of the Nominating Committee are Jack L. Bowman (Chairman),
Raymond C. Carnahan and Herbert H. McDade. The Nominating Committee held one
meeting during 1995.
COMPENSATION OF DIRECTORS
Directors who are employees of the Company receive no compensation for their
services as directors or as members of committees. During 1995 non-employee
members of the Board of Directors received a quarterly retainer of $1,000. The
non-employee Chairman of the Board and directors who chair a Board committee
received an additional quarterly retainer of $250. The non-employee directors
also were eligible to receive fees of $500 and $250 for each regularly-scheduled
Board meeting and Committee meeting attended, respectively, and a fee of $1,000
for each special Board meeting attended. Non-employee directors who also serve
on the Board of one of the Company's wholly-owned subsidiaries also received a
quarterly retainer of $1,000 and a fee of $500 for each subsidiary Board meeting
attended. During 1995, Mr. Raymond C. Carnahan, Jr. performed certain
consultation services for the Company for which he received a fee of $2,000.
Pursuant to the CytRx Corporation 1994 Stock Option Plan, non-employee
directors receive an initial stock option grant to purchase 5,000 shares upon
the date he or she first becomes a member of the Board. Options to purchase
1,875 shares of Common Stock are granted to each non-employee director annually.
Stock option grants to directors pursuant to the Plans discussed above contain
the same terms and provisions as stock option grants to employees, except that
options granted to directors are considered Non-Qualified Stock Options for
income tax reporting purposes.
Effective in March 1996, the Board compensation structure was revised to
eliminate the quarterly retainers as well as fees for service as a director of
wholly-owned subsidiaries. Non-employee directors now receive a fee of $3,000
for each two-day Board meeting attended and $500 for each Committee meeting
attended. Non-employee directors who chair a Board committee will receive an
additional $250 for each Committee meeting attended. Stock Option grants to
non-employee directors of CytRx Corporation will remain unchanged.
Non-employee directors who also serve as a director of one of the Company's
wholly-owned subsidiaries will receive a stock option grant to purchase 5,000
shares of the subsidiary's common stock upon the date he or she first becomes a
member of the subsidiary Board and an annual stock option grant to purchase
2,500 shares.
5
<PAGE>
BENEFICIAL OWNERS OF MORE THAN FIVE PERCENT OF THE COMPANY'S COMMON STOCK;
SHARES HELD BY DIRECTORS AND EXECUTIVE OFFICERS
Based solely upon information made available to the Company, the following
table sets forth certain information with respect to the beneficial ownership of
Common Stock as of April 26, 1996 by (i) each person who is known by the Company
to beneficially own more than five percent of Common Stock; (ii) each director
and nominee for director of the Company; (iii) each of the Named Executive
Officers (as defined under "Executive Compensation" below); and (iv) all
officers and directors as a group. Except as otherwise indicated, the holders
listed below have sole voting and investment power with respect to all shares of
Common Stock beneficially owned by them. All share information presented here
has been adjusted to reflect a one-for-four reverse stock split effected on
February 6, 1996.
Name and Shares of Common Stock
Address of Beneficial Owner Number Percentage (1)
- --------------------------- ------ --------------
Named Executive Officers and Directors (2):
Lucine Beauchard (3) 26,727 *
Jack L. Bowman (4) 3,618 *
Raymond C. Carnahan (5) 11,500 *
Francis J. Casieri (6) 10,423 *
R. Martin Emanuele (7) 62,310 *
Jack J. Luchese (8) 642,437 7.6%
Herbert H. McDade (9) 15,417 *
Selvi Vescovi (10) 16,250 *
James M. Yahres (11) 30,171 *
All executive officers and
directors as a group (10 persons) (12) 835,974 9.6%
Other 5% Stockholders:
Robert L. Hunter, Jr. 515,428 6.5%
3640 Churchwell Court
Tucker, Georgia 30084
Morton Davis 458,281 5.8%
D.H. Blair Investment Banking Corp.
44 Wall Street
New York, NY 10005
__________________________________
* Less than 1%.
(1) Based on 7,870,920 shares of Common Stock outstanding on April 26, 1996.
(2) The business address of all such persons is: c/o CytRx Corporation, 154
Technology Parkway, Norcross, Georgia 30092.
(3) Includes options to purchase 21,950 shares of Common Stock exercisable
within 60 days.
(4) Includes options to purchase 2,893 shares of Common Stock exercisable
within 60 days.
(5) Includes options to purchase 11,250 shares of Common Stock exercisable
within 60 days.
(6) Includes options to purchase 6,878 shares of Common Stock exercisable
within 60 days.
(7) Includes options to purchase 61,165 shares of Common Stock exercisable
within 60 days.
(8) Includes warrants to purchase 619,927 shares of Common Stock exercisable
within 60 days.
(9) Includes options to purchase 15,417 shares of Common Stock exercisable
within 60 days.
(10) Includes options to purchase 15,000 shares of Common Stock exercisable
within 60 days.
(11) Includes options to purchase 23,893 shares of Common Stock exercisable
within 60 days.
(12) Includes options to purchase 792,467 shares of Common Stock exercisable
within 60 days.
6
<PAGE>
EXECUTIVE OFFICERS OF THE COMPANY
Except for Jack J. Luchese, discussed above under "Certain Information
Concerning Nominees", the following table sets forth the names of the executive
officers of the Company, their ages, their positions with the Company and their
principal occupations and employers for at least the last five years. For
information concerning executive officers' ownership of Common Stock, see
"Beneficial Owners of More Than Five Percent of the Company's Common Stock;
Shares Held by Directors and Executive Officers."
Positions with the Company and Principal
Name Age Occupations During at Least the Past Five Years
- ------------------- --- -----------------------------------------------
Lucine E. Beauchard 40 Ms. Beauchard joined CytRx April 1992 as Vice
President of Business Development/Marketing.
From 1991 to 1992, Ms. Beauchard served as a
Senior Marketing Consultant with the firm of
Barton and Pittinos. From 1987 to 1990, Ms.
Beauchard worked for Rorer Group, Inc. (now
Rhone-Poulenc Rorer), where she directed the
corporate business development function and
served as Vice President, Professional Sales
and Marketing, of its Consumer Division. Prior
to joining Rorer Group, Inc., Ms. Beauchard
served as New Product Director for McNeil
Pharmaceutical, a division of Johnson & Johnson
Company.
Francis J. Casieri 53 Mr. Casieri joined CytRx as Vice President,
Operations in March 1994. Effective January
1996, Mr. Casieri has been appointed President
and Chief Executive Officer of Proceutics,
Inc., a wholly-owned subsidiary of CytRx.
Prior to joining CytRx, Mr. Casieri worked as
the Marketing and Sales Director at
Pharmaceutical Product Development, Inc. from
1991 to 1994. From 1989 to 1991, Mr. Casieri
served as Vice President, Operations for
Applied Analytical Industries.
R. Martin Emanuele, Ph.D. 41 Dr. Emanuele has been Vice President of
Development of the Company since June 1990.
Previously, Dr. Emanuele served as the RheothRx
project director at the Company. Before
joining CytRx in 1988, he worked as a clinical
research scientist at DuPont Critical Care and
as a visiting scientist at Institute Choay.
William B. Fleck 38 Mr. Fleck joined CytRx in April 1993 as Vice
President, Human Resources. From 1992 to 1993
Mr. Fleck served as Director, Human Resources
and Training for Central Health Services (CHS).
During 1991, he was Director, Human Resources
for Knowledgeware, Inc. Prior to joining
Knowledgeware, Mr. Fleck held senior human
resources management positions with MCI
Communications from 1989 to 1991 and Harris/3M
from 1984 to 1989.
James M. Yahres 47 Mr. Yahres joined CytRx in January 1993 as Vice
President of Finance and Administration and as
Corporate Secretary. From 1987 to 1993, Mr.
Yahres served in corporate planning, business
development, and financial management
capacities at Rhone-Poulenc Rorer (formerly
Rorer Group, Inc.), most recently as Vice
President of Investor Relations. Mr. Yahres
has also served in a broad range of financial
positions, including Executive Director of
Finance at the McNeil Pharmaceutical division
of Johnson & Johnson Company.
7
<PAGE>
EXECUTIVE COMPENSATION
The following table presents certain summary information concerning
compensation paid or accrued by the Company for services rendered in all
capacities during the fiscal years ended December 31, 1993, 1994 and 1995 for
(i) the President and Chief Executive Officer of the Company; and (ii) each of
the four other most highly compensated executive officers of the Company whose
total salary and bonus exceeded $100,000 (determined as of December 31, 1995 and
collectively, the "Named Executive Officers"). All share information presented
in the each of the executive compensation tables has been adjusted to reflect a
one-for-four reverse stock split effected on February 6, 1996.
<TABLE>
SUMMARY COMPENSATION TABLE
<CAPTION>
Annual Compensation Long-Term Compensation
-------------------- ---------------------- All Other
Name and Principal Position Year Salary($) Bonus($) Options(#) Compensation($)
- --------------------------- ---- --------- -------- ---------- ---------------
<S> <C> <C> <C> <C> <C>
Jack J. Luchese 1995 $295,000 $ 75,000 132,427 <F1> $ 4,620 <F2>
President and Chief 1994 64,500 100,000 75,000 4,620 <F2>
Executive Officer 1993 268,000 70,000 75,000 4,497 <F2>
Lucine E. Beauchard 1995 142,500 15,000 24,961 <F1> 4,620 <F2>
Vice President, Business 1994 137,500 17,500 3,750 4,620 <F2>
Development 1993 132,500 17,500 2,500 4,497 <F2>
Francis J. Casieri 1995 135,000 25,000 8,135 <F1> 4,620 <F2>
Vice President, 1994 128,524 25,000 21,250 4,507 <F2>
Operations 1993 - - - -
R. Martin Emanuele 1995 157,500 25,000 50,265 <F1> 4,620 <F2>
Vice President, 1994 146,250 17,500 6,250 4,620 <F2>
Preclinical Research & 1993 131,500 22,500 5,625 4,497 <F2>
Development
James M. Yahres 1995 146,500 15,000 27,031 <F1> 4,620 <F2>
Vice President, Finance 1994 141,000 25,000 3,750 4,620 <F2>
& Administration 1993 135,000 20,000 40,625 113,649 <F3>
___________________________
<FN>
<F1> Includes shares underlying options and warrants which were reissued and
repriced concurrent with the cancellation of previously issued options and
warrants (see "Ten-Year Option Repricings").
<F2> Amounts represent matching contributions by the Company under the Company's
401(k) Profit Sharing Plan.
<F3> Amount shown includes $4,497 in matching contributions by the Company under
the Company's 401(k) Profit Sharing Plan and $109,152 in costs associated
with the officer's relocation.
</FN>
</TABLE>
8
<PAGE>
OPTION GRANTS IN LAST FISCAL YEAR
The following table summarizes the stock options and warrants granted during
the fiscal year ended December 31, 1995 to each of the Company's executive
officers named in the Summary Compensation Table above.
<TABLE>
<CAPTION>
Potential Realized Value
Number of % of Total at Assumed Annual Rates of
Securities Options Stock Price Appreciation
Underlying Granted to Exercise or for Option Term
Options Employees Base Price Expiration --------------------------
Name Granted (#) in Fiscal Year ($/Share) Date 5% 10%
- ------------------- ----------- -------------- ----------- ---------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Jack J. Luchese 25,000 <F1> 7.5% $7.00 2/20/05 $110,057 $278,905
75,000 <F2> 22.6% $7.00 2/20/05 330,170 836,715
32,427 <F2> 9.8% 7.00 2/24/03 142,752 361,762
Lucine E. Beauchard 3,750 <F3> 1.1% 4.00 12/8/05 9,433 23,906
18,015 <F4> 5.4% 7.00 4/22/02 79,307 200,979
1,665 <F4> .5% 7.00 11/30/02 7,330 18,575
1,531 <F4> .5% 7.00 11/29/03 6,740 17,080
Francis J. Casieri 6,250 <F4> 1.9% 7.00 3/24/04 27,514 69,726
1,885 <F4> .6% 7.00 8/25/04 8,298 21,029
R. Martin Emanuele 13,125 <F5> 5.9% 7.00 3/30/05 57,780 146,425
3,750 <F3> 1.1% 4.00 12/8/05 9,433 23,906
1,250 <F4> .4% 7.00 2/2/00 5,503 13,945
3,750 <F4> 1.1% 7.00 4/28/00 16,508 41,836
18,750 <F4> 5.6% 7.00 5/29/01 82,542 209,179
4,375 <F4> 1.3% 7.00 11/14/01 19,260 48,808
1,665 <F4> .5% 7.00 11/30/02 7,330 18,575
1,303 <F4> .4% 7.00 3/31/03 5,736 14,537
2,297 <F4> .7% 7.00 11/29/03 10,112 25,626
James M. Yahres 3,750 <F3> 1.1% 4.00 12/8/05 9,433 23,906
21,367 <F4> 6.4% 7.00 1/4/03 94,063 238,374
1,914 <F4> .6% 7.00 11/29/03 8,426 21,353
___________________
<FN>
<F1> Warrants granted to Mr. Luchese are related to an extension of his
employment term and are subject to the terms as described under "Employment
Agreement."
<F2> Warrants were repriced related to an extension of Mr. Luchese's employment
term and are subject to the terms as described under "Employment
Agreement."
<F3> These options vest in equal annual installations over a three year period
and are exercisable for ten years from the date of grant. Exercise price
is based on the market price of CytRx Common Stock as of the date of grant.
<F4> These options were issued in connection with the repricing and cancellation
of previously issued options (see "Ten-Year Option Repricings").
<F5> These options vest upon the achievement of performance criteria specified
in the option contract. As of December 31, 1995 options as to 10,313
shares have vested and 2,812 remain eligible for future vesting, subject to
performance criteria. Exercise price is based on the market price of CytRx
Common Stock as of the date of grant.
</FN>
</TABLE>
9
<PAGE>
TEN-YEAR OPTION REPRICINGS
The following table sets forth certain information with respect to
adjustments to the exercise price of stock options previously awarded to any of
the named executive officers during the last ten fiscal years:
On December 8, 1994 CytRx's Board of Directors approved a stock option
repricing program whereby all employees were given the choice to reprice all, or
a portion, of their stock option contracts based on the market price of the
Company's Common Stock on the date of Board approval ($7.00). If elected, the
repricing would be effective January 1, 1995. In order to elect the repricing,
each employee's options were subject to a repricing formula which, in most
cases, yielded a lower number of options after the repricing. For all Named
Executive Officers the number of options elected for repricing totaled 257,500,
which converted to 193,444 after the repricing, yielding net cancellations of
64,056 options. No option terms were extended in connection with the repricing.
<TABLE>
<CAPTION>
Length of
Number of Original
Securities Market Price Exercise Option Term
Underlying of Stock at Price Remaining
Options Time of at Time of New at Date of
Repriced or Repricing or Repricing or Exercise Repricing
Name and Principal Position Date Amended (#) Amendment($) Amendment($) Price($) or Amendment
- ----------------------------- ------ ----------- ------------ ------------ -------- ------------
<S> <C> <C> <C> <C> <C> <C>
Jack J. Luchese 1/1/95 32,427 $5.25 $17.00 $7.00 8.2 yrs
President & CEO 1/1/95 75,000 5.25 16.00 7.00 9.5 yrs
Lucine E. Beauchard 1/1/95 18,015 5.25 25.50 7.00 7.3 yrs
Vice President, 1/1/95 1,665 5.25 23.00 7.00 7.9 yrs
Business Development 1/1/95 1,531 5.25 20.00 7.00 8.9 yrs
Francis J. Casieri 1/1/95 6,250 5.25 24.50 7.00 9.2 yrs
Vice President, Operations 1/1/95 1,885 5.25 16.25 7.00 9.7 yrs
R. Martin Emanuele 1/1/95 1,250 5.25 9.50 7.00 5.1 yrs
Vice President, Preclinical 1/1/95 3,750 5.25 11.625 7.00 5.3 yrs
Research and Development 1/1/95 18,750 5.25 7.875 7.00 6.4 yrs
1/1/95 4,375 5.25 17.50 7.00 6.9 yrs
1/1/95 1,665 5.25 23.00 7.00 7.9 yrs
1/1/95 1,303 5.25 17.625 7.00 8.2 yrs
1/1/95 2,297 5.25 20.00 7.00 8.9 yrs
James M. Yahres 1/1/95 21,367 5.25 21.50 7.00 8.0 yrs
Vice President, Finance 1/1/95 1,914 5.25 20.00 7.00 8.9 yrs
and Administration
</TABLE>
10
<PAGE>
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND
OPTION VALUE AT DECEMBER 31, 1995
The following table sets forth the number and total value of unexercised in-
the-money options at December 31, 1995 for each of the executive officers of the
Company named in the Summary Compensation Table above, using the price per share
of the Common Stock of $4.50 on December 31, 1995. No stock options were
exercised during 1995 by any of the Company's Named Executive Officers.
Number of Securities Underlying Value of Unexercised
Unexercised Options In-the-Money Options
at December 31, 1995(#) at December 31, 1995($)
------------------------------- ---------------------------
Exercisable Unexercisable Exercisable Unexercisable
----------- ------------- ----------- -------------
Jack J. Luchese 607,427 75,000 $ - $ -
Lucine E. Beauchard 21,950 6,761 - 1,875
Francis J. Casieri 4,794 9,591 - -
R. Martin Emanuele 60,730 20,368 6,875 21,563
James M. Yahres 16,770 14,011 - 1,875
EMPLOYMENT AGREEMENT
Jack J. Luchese was named President and Chief Executive Officer of the
Company in March 1989. Mr. Luchese's current employment agreement was amended
and restated in February 1995 (the "Agreement") to extend his employment with
the Company until December 31, 1998, subject to earlier termination. The
Agreement also consolidates (through cancellation and reissuance) all warrants
previously granted to Mr. Luchese. Under the Agreement, Mr. Luchese is paid an
annual base salary of $295,000 (effective January 1, 1995), adjusted annually in
proportion to the average annual merit increases for all other employees. In
addition to his annual base salary, Mr. Luchese is eligible to receive cash
bonuses with respect to each calendar year during the term of the Agreement as
determined from time to time by the Board of Directors of the Company in its
sole discretion.
The Agreement also grants Mr. Luchese warrants to purchase an aggregate of
682,427 shares of CytRx Common Stock (the "Warrants") subject to the exercise
requirements set forth in the Agreement. Warrants to purchase 50,000 shares at
$4.50 per share expire on February 22, 2001. Warrants to purchase 32,427 shares
at $7.00 per share expire on March 24, 2003. Warrants to purchase 100,000
shares at $7.00 per share expire on February 20, 2005. Warrants to purchase
500,000 shares at $4.50 per share expire on February 28, 2005. As of April 1,
1996, 619,927 of the Warrants are vested. The remaining Warrants vest at the
rate of 6,250 shares at the beginning of each calendar quarter until October 1,
1998. All of the Warrants that have vested on the termination of the Agreement
may be exercised by Mr. Luchese at any time until the expiration of the
Warrants. The shares of stock that may be acquired upon exercise of the
Warrants have been or will be registered by the Company under the Securities Act
of 1933, as amended.
The Warrants contain certain anti-dilution provisions and provide for
accelerated vesting in the event that Mr. Luchese's employment is terminated by
the Board of Directors without cause, in the event of his death or disability or
in the event of a change of control. If Mr. Luchese is terminated within two
years after a change of control for reasons other than with cause or because of
his death or disability (as those terms are defined in the Agreement), then
the Company shall pay Mr. Luchese a lump sum equal to the salary and bonuses
that Mr. Luchese would have received during the remaining term of the Agreement,
assuming the remaining term is not less than one nor more than two years and the
future bonuses equal the average bonus for the two years before the year in
which the change of control occurs. In addition, the Company will extend Mr.
Luchese's benefits during the one to two year period. The Agreement also
contains confidentiality and noncompetition provisions.
11
<PAGE>
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The following report shall not be deemed incorporated by reference into any
filing under the Securities Act of 1933 (the "1933 Act") or under the Securities
and Exchange Act of 1934 (the "1934 Act"), except to the extent that the Company
specifically incorporates this information by reference, and shall not otherwise
be deemed filed under either the 1933 Act or the 1934 Act.
The Compensation Committee of the Board of Directors (the "Committee")
establishes the general compensation practices of the Company, establishes the
compensation plans and specific compensation levels for executive officers and
administers the Company's stock option plans.
The Committee believes that the Chief Executive Officer's compensation should
be heavily influenced by Company performance, although "performance" for a
development company in the biotechnology industry does not necessarily correlate
to profits. The Committee considers "performance" to include achievement of
product development targets and milestones, and effective management of
personnel and capital resources, among other criteria. The Committee also
reviews the Chief Executive Officer's compensation in light of the level of
similar executive compensation arrangements within the biotechnology industry.
The Committee also believes that stock options should be granted to the Chief
Executive Officer, as well as to other executives, primarily based on the
executive's ability to influence the Company's long-term growth and
profitability. As such, Mr. Luchese's employment agreement includes warrants
to purchase 682,427 shares of CytRx Common Stock at prices ranging from $4.50
to $7.00 per share. These warrants cover the period from Mr. Luchese's initial
employment (March 13, 1989) through December 31, 1998. See "Employment
Agreement" for a full discussion of the terms of Mr. Luchese's employment
agreement. The Committee believes that this arrangement provides Mr. Luchese
with the greatest incentive to accelerate achievement of corporate objectives
and thereby enhance long-term shareholder value.
Under his employment agreement, Mr. Luchese is eligible to be considered for
an annual cash bonus, which is solely at the discretion of the Committee based
upon such factors as the Committee deems appropriate. Mr. Luchese's Employment
Agreement was amended to change his performance review period to be consistent
with other Company executives. Mr. Luchese's performance period for purposes of
this report is April 1, 1994 through December 31, 1994. During this time, the
Company successfully initiated its RheothRx "defense" project which was intended
to increase the Company's strategic options for the RheothRx compound. The
Company accelerated its development plans for Protox with the goal of filing a
comprehensive IND in the first quarter of 1995. The Company successfully
completed and occupied the new Pharmaceutical Development Center on time and
within budget. This investment allows the Company to perform the specialty
copolymer drug development activities in-house while keeping the development
proprietary and protected. The Company restructured its Vaxcel subsidiary by
eliminating certain positions and adding a new strategic staff, which included
the selection of a Vice President of Research and Development. Vetlife attained
a significant milestone by hiring its President and CEO in July 1994. Based
upon these accomplishments, the Committee awarded Mr. Luchese a cash bonus for
1994 of $75,000 which was paid in April 1995.
The Committee has adopted similar practices with respect to compensation of
other executive officers of the Company. In establishing base salaries and cash
bonuses for executive officers, the Committee considers relative company
performance, the individual's past performance and future potential, and
compensation for persons holding similarly responsible positions at other
companies in the pharmaceutical and biotechnology industries. The relative
importance of these factors varies depending upon the individual's
responsibilities; all facts are considered in establishing both base salaries
and cash bonuses. When making comparison to other companies, the Committee
generally considers those companies included in the Nasdaq Pharmaceutical Index
(see "Company Performance"). The Committee, in conjunction with the Chief
Executive Officer, has also established a model composed of salary range
12
<PAGE>
categories with specified percentages to be applied to each employee's salary
(including executive officers) to provide a guideline for annual cash bonuses
and the number of stock options to be granted. This model is used only as a
guideline, as some subjectivity must be applied in evaluating each individual's
performance. As with the Chief Executive Officer, the number of options granted
is determined by the evaluation of the Executive's ability to influence the
Company's long-term growth and profitability. The Committee also considers the
aggregate number of options granted in past years. All options are granted at
the current market price. Because the value of an option bears a direct
relationship to the Company's stock price, it is an effective incentive for
executives to create value for stockholders. The Committee therefore views
stock options as an important component of its long-term, performance-based
compensation philosophy.
Stock Option Repricing -- The Company uses stock options in its compensation
program to provide the incentive and motivation for employees to work harder, to
retain valuable employees and to align the interests of employees and
stockholders. As the Company's stock price falls below the employee's stock
option exercise price, the options may lose their motivational and retentive
value. This situation ocurred at CytRx during the fourth quarter of 1995.
First, the biotechnology market became depressed thereby deflating biotech
stock prices in general. Second, negative news from Glaxo-Wellcome concerning
RheothRx pushed the value of CytRx's stock down further. Both of these factors
were unpredictable and beyond the control of CytRx or its employees. In order
to restore the motivational and retentive value of existing employee stock
options, in December 1995 the Committee approved a stock option repricing
program which was offered to all employees who held options. The Committee's
goal was to offer employees the choice of repricing all, or a portion, of their
existing stock options at the then-current market price of $7.00. As a
trade-off, if the employee chose to reprice he or she had to forfeit a portion
of his or her total stock options based upon a formula that accounted for the
difference between the employee's existing exercise price and the new "repriced"
exercise price of $7.00. A total of 32 out of 34 eligible employees chose to
reprice their options, resulting in the repricing and reissuance of a total of
256,987 options and the net cancellation of 86,060 options.
For 1995, the Committee considered Section 162(m), which limits tax
deductions of public companies on compensation to certain executive officers in
excess of $1 million dollars, along with other factors in determining executive
compensation. The committee will continue to consider the effect of Section 162
(m) on its compensation decisions, but has no formal policy to structure
executive compensation so that it complies with the requirements of Section
162(m).
Respectfully submitted,
Compensation Committee:
Selvi Vescovi
Raymond C. Carnahan, Jr.
Herbert H. McDade, Jr.
Compensation Committee Interlocks and Insider Participation. There are no
"interlocks," as defined by the Securities and Exchange Commission, with respect
to any member of the Compensation Committee. During 1995, Messrs. Vescovi,
Bowman, Carnahan and McDade served on the Compensation Committee.
13
<PAGE>
STOCKHOLDER RETURN COMPARISON
The following line graph presentation compares cumulative total stockholder
returns of the Company with the Nasdaq Stock Market Index and the Nasdaq
Pharmaceutical Index (the "Peer Index") for the five year period from 1991 to
1995. The graph and table assume that $100 was invested in each of the
Company's Common Stock, the Nasdaq Stock Market Index and the Peer Index on
December 31, 1990, and that all dividends were reinvested. This data was
furnished by the Center for Research in Security Prices, The University of
Chicago.
COMPARISON OF CUMULATIVE TOTAL RETURNS
(performance graph appears here)
December 31
--------------------------------------------
1990 1991 1992 1993 1994 1995
---- ---- ---- ---- ---- ----
CytRx Corporation $100 $544 $672 $800 $168 $144
The Nasdaq Stock Market 100 161 187 215 210 296
Peer Index 100 266 221 197 148 271
PROPOSAL II
RATIFICATION OF AUDITORS
The Company's Board of Directors has selected Ernst & Young LLP to conduct
the annual audit of the financial statements of the Company for the fiscal year
ending December 31, 1996. Ernst & Young LLP has no financial interest, direct
or indirect, in the Company, and does not have any connection with the Company
except in its professional capacity as an independent auditor.
The ratification by the holders of Common Stock of the selection of Ernst &
Young LLP as independent auditors is not required by law or by the Bylaws of the
Company. The Board of Directors, consistent with the practice of many publicly
held corporations, is nevertheless submitting this selection to the holders of
Common Stock. If this selection is not ratified at the Annual Meeting, the
Board of Directors intends to reconsider its selection of independent auditors
for the fiscal year ending December 31, 1996.
14
<PAGE>
The Audit Committee, which is composed of directors who are not employees of
the Company, approves in advance all material non-audit services to be provided
by Ernst & Young LLP and believes that these services have no effect on audit
independence.
Representatives of Ernst & Young LLP will be present at the Annual Meeting
and will have an opportunity to make a statement, if they so desire, and will be
available to respond to appropriate questions.
The Board of Directors recommends that stockholders vote FOR ratification of
the selection of Ernst & Young LLP as independent auditors for the fiscal year
ending December 31, 1996. If a choice is specified on the proxy by the
stockholder, the shares will be voted as specified. If no specification is
made, the shares will be voted FOR ratification. The affirmative vote of a
majority of the votes of the shares of Common Stock represented and entitled to
vote at the Annual Meeting at which a quorum is present is required for approval
of Proposal II.
STOCKHOLDER PROPOSALS
Any proposal which a Company stockholder intends to be presented at the next
annual meeting of stockholders to be held in 1997 must be received by the
Company on or before January 10, 1997. Only proper proposals which are timely
received will be included in the Proxy Statement and Proxy.
OTHER MATTERS
EXPENSES OF SOLICITATION
The cost of soliciting proxies in the accompanying form will be borne by the
Company. In addition to the use of the mails, proxies may be solicited by
directors, officers or other employees of the Company, personally, by telephone
or by telegraph. The Company does not expect to pay any compensation for the
solicitation of proxies, but may reimburse brokers, custodians or other persons
holding stock in their names or in the names of nominees for their expenses in
sending proxy materials to principals and obtaining their instructions.
MISCELLANEOUS
Management does not know of any matters to be brought before the Annual
Meeting other than as described in this Proxy Statement. Should any other
matters properly come before the Annual Meeting, the persons designated as
proxies will vote in accordance with their best judgment on such matters.
AVAILABILITY OF ANNUAL REPORT
Accompanying this Proxy Statement is a copy of the Company's Annual Report
for the year ended December 31, 1995. Stockholders who would like additional
copies of the Annual Report should direct their requests in writing to: CytRx
Corporation, 154 Technology Parkway, Norcross, Georgia 30092, Attention: James
M. Yahres.
By Order of the Board of Directors,
/s/ James M. Yahres
May 10, 1996 James M. Yahres
Secretary
15
<PAGE>
APPENDIX I - FORM OF PROXY
CYTRX CORPORATION
154 Technology Parkway
Norcross, Georgia 30092
Annual Meeting of Stockholders
The undersigned stockholder of CytRx Corporation (the "Company"), Norcross,
Georgia, hereby constitutes and appoints Jack J. Luchese and James M. Yahres or
either one of them, each with full power of substitution, to vote the number of
shares of Common Stock which the undersigned would be entitled to vote if
personally present at the Annual Meeting of Stockholders to be held at the
Hilton Hotel at Peachtree Corners, 5993 Peachtree Industrial Boulevard,
Norcross, Georgia, on Tuesday, June 25, 1996, at 10:00 A.M., local time, or at
any adjournments thereof (the "Annual Meeting"), upon the proposals described in
the Notice of Annual Meeting of Stockholders and Proxy Statement, both dated May
10, 1996, the receipt of which is acknowledged, in the manner specified below.
1. ELECTION OF DIRECTORS. On the proposal to elect the following slate of
directors to serve until the 1997 Annual Meeting of Stockholders of the
Company and until their successors are elected and qualified:
Jack L. Bowman
Raymond C. Carnahan, Jr.
Herbert H. McDade, Jr.
Jack J. Luchese
For ___ Withhold Authority ___
To withhold authority for any individual nominee(s), write the name of the
nominee(s) in the space provided:
2. SELECTION OF AUDITORS. On the proposal to ratify the selection of Ernst &
Young LLP as the Company's independent auditors for the fiscal year ending
December 31, 1996:
For ___ Against ___ Abstain ___
3. OTHER PROPOSALS. In their sole discretion, the Proxies are authorized to
vote upon such other business as may properly come before the Annual Meeting
or any adjournments thereof.
For ___ Withhold Authority ___
This Proxy, when properly executed, will be voted in the manner directed by the
undersigned stockholder. If no direction is made, this Proxy will be voted FOR
Proposals 1 and 2 and with discretionary authority on all other matters that may
properly come before the Annual Meeting or any adjournments thereof.
Please sign exactly as your name appears on your stock certificate and date.
Where shares are held jointly, each stockholder should sign. When signing as
executor, administrator, trustee, or guardian, please give full title as such.
If a corporation, please sign in full corporate name by president or other
authorized officer. If a partnership, please sign in partnership name by
authorized person.
Shares Held: ________________
_____________________________
Signature of Stockholder
_____________________________
Signature of Stockholder (If held Jointly)
Dated: _________________, 1996
THIS PROXY IS SOLICITED ON BEHALF OF CYTRX CORPORATION'S BOARD OF DIRECTORS AND
MAY BE REVOKED BY THE STOCKHOLDER PRIOR TO ITS EXERCISE.
